CONDENSED CONSOLIDATING FINANCIAL INFORMATION | CONDENSED CONSOLIDATING FINANCIAL INFORMATION On April 21, 2015, the Company issued $350.0 million in aggregate principal amount of the 2023 Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. In connection with the 2023 Notes Offering, the Company and its subsidiary guarantors entered into a registration rights agreement, dated as of April 21, 2015, pursuant to which the Company agreed to file a registration statement with respect to an offer to exchange the 2023 Notes for a new issue of substantially identical debt securities registered under the Securities Act. The exchange offer for the 2023 Notes was completed on October 13, 2015. On October 14, 2016, the Company issued $650.0 million in aggregate principal amount of the 2024 Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The net proceeds from the issuance of the 2024 Notes, together with cash on hand, were used to repurchase or redeem all of the then-outstanding 2020 Notes in October 2016. On December 21, 2016, the Company issued $600.0 million in aggregate principal amount of the 2025 Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The Company used the net proceeds from the issuance of the 2025 Notes, together with the net proceeds from the December 2016 underwritten offering of the Company’s common stock and cash on hand, to fund the cash portion of the purchase price for the Vitruvian Acquisition. In connection with the 2024 Notes and the 2025 Notes Offerings, the Company and its subsidiary guarantors entered into two registration rights agreements, pursuant to which the Company agreed to file a registration statement with respect to offers to exchange the 2024 Notes and the 2025 Notes for new issues of substantially identical debt securities registered under the Securities Act. The exchange offers for the 2024 Notes and the 2025 Notes were completed on September 13, 2017. On October 11, 2017, the Company issued $450.0 million in aggregate principal amount of the 2026 Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. A portion of the net proceeds from the issuance of the 2026 Notes was used to repay all of the Company's outstanding borrowings under its secured revolving credit facility on October 11, 2017 and the balance was used to fund the remaining outspend related to the Company's 2017 capital development plans. In connection with the 2026 Notes offering, the Company and its subsidiary guarantors entered into a registration rights agreement pursuant to which the Company agreed to file a registration statement with respect to an offer to exchange the 2026 Notes for a new issue of substantially identical debt securities registered under the Securities Act. On January 18, 2018, the Company filed a registration statement on Form S-4 with respect to an offer to exchange the 2026 Notes for substantially identical debt securities registered under the Securities Act, which registration statement was declared effective by the SEC on February 12, 2018. The exchange offer relating to the 2026 notes closed on March 22, 2018. The 2023 Notes, the 2024 Notes, the 2025 Notes and the 2026 Notes are guaranteed on a senior unsecured basis by all existing consolidated subsidiaries that guarantee the Company’s secured revolving credit facility or certain other debt (the “Guarantors”). The 2023 Notes, the 2024 Notes, the 2025 Notes and the 2026 Notes are not guaranteed by Grizzly Holdings, Inc. (the “Non-Guarantor”). The Guarantors are 100% owned by Gulfport (the “Parent”), and the guarantees are full, unconditional, joint and several. There are no significant restrictions on the ability of the Parent or the Guarantors to obtain funds from each other in the form of a dividend or loan. The following condensed consolidating balance sheets, statements of operations, statements of comprehensive income and statements of cash flows are provided for the Parent, the Guarantors and the Non-Guarantor and include the consolidating adjustments and eliminations necessary to arrive at the information for the Company on a condensed consolidated basis. The information has been presented using the equity method of accounting for the Parent’s ownership of the Guarantors and the Non-Guarantor. CONDENSED CONSOLIDATING BALANCE SHEETS (Amounts in thousands) September 30, 2018 Parent Guarantors Non-Guarantor Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 89,214 $ 35,357 $ — $ — $ 124,571 Accounts receivable - oil and natural gas sales 111,463 45,928 — — 157,391 Accounts receivable - joint interest and other 19,066 20,445 — — 39,511 Accounts receivable - related parties 79 — — — 79 Accounts receivable - intercompany 662,319 240,373 — (902,692 ) — Prepaid expenses and other current assets 7,521 2,221 — — 9,742 Short-term derivative instruments 19,809 — — — 19,809 Total current assets 909,471 344,324 — (902,692 ) 351,103 Property and equipment: Oil and natural gas properties, full-cost accounting 7,003,396 2,934,047 — (729 ) 9,936,714 Other property and equipment 91,637 751 — — 92,388 Accumulated depletion, depreciation, amortization and impairment (4,506,267 ) (39 ) — — (4,506,306 ) Property and equipment, net 2,588,766 2,934,759 — (729 ) 5,522,796 Other assets: Equity investments and investments in subsidiaries 2,723,140 — 53,380 (2,543,991 ) 232,529 Long-term derivative instruments 3,530 — — — 3,530 Inventories 6,800 1,434 — — 8,234 Other assets 13,018 4,020 — — 17,038 Total other assets 2,746,488 5,454 53,380 (2,543,991 ) 261,331 Total assets $ 6,244,725 $ 3,284,537 $ 53,380 $ (3,447,412 ) $ 6,135,230 Liabilities and Stockholders ’ Equity Current liabilities: Accounts payable and accrued liabilities $ 464,426 $ 118,038 $ — $ — $ 582,464 Accounts payable - intercompany 240,310 662,254 128 (902,692 ) — Asset retirement obligation - current 120 — — — 120 Short-term derivative instruments 62,601 — — — 62,601 Current maturities of long-term debt 647 — — — 647 Total current liabilities 768,104 780,292 128 (902,692 ) 645,832 Long-term derivative instruments 15,101 — — — 15,101 Asset retirement obligation - long-term 65,634 12,777 — — 78,411 Deferred tax liability 3,046 — — — 3,046 Long-term debt, net of current maturities 2,100,825 — — — 2,100,825 Total liabilities 2,952,710 793,069 128 (902,692 ) 2,843,215 Stockholders’ equity: Common stock 1,732 — — — 1,732 Paid-in capital 4,316,006 1,915,598 261,626 (2,177,224 ) 4,316,006 Accumulated other comprehensive (loss) income (46,354 ) — (44,338 ) 44,338 (46,354 ) Retained (deficit) earnings (979,369 ) 575,870 (164,036 ) (411,834 ) (979,369 ) Total stockholders’ equity 3,292,015 2,491,468 53,252 (2,544,720 ) 3,292,015 Total liabilities and stockholders ’ equity $ 6,244,725 $ 3,284,537 $ 53,380 $ (3,447,412 ) $ 6,135,230 CONDENSED CONSOLIDATING BALANCE SHEETS (Amounts in thousands) December 31, 2017 Parent Guarantors Non-Guarantor Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 67,908 $ 31,649 $ — $ — $ 99,557 Accounts receivable - oil and natural gas sales 112,686 34,087 — — 146,773 Accounts receivable - joint interest and other 15,435 20,005 — — 35,440 Accounts receivable - intercompany 554,439 63,374 — (617,813 ) — Prepaid expenses and other current assets 4,719 193 — — 4,912 Short-term derivative instruments 78,847 — — — 78,847 Total current assets 834,034 149,308 — (617,813 ) 365,529 Property and equipment: Oil and natural gas properties, full-cost accounting, 6,562,147 2,607,738 — (729 ) 9,169,156 Other property and equipment 86,711 43 — — 86,754 Accumulated depletion, depreciation, amortization and impairment (4,153,696 ) (37 ) — — (4,153,733 ) Property and equipment, net 2,495,162 2,607,744 — (729 ) 5,102,177 Other assets: Equity investments and investments in subsidiaries 2,361,575 77,744 57,641 (2,194,848 ) 302,112 Long-term derivative instruments 8,685 — — — 8,685 Deferred tax asset 1,208 — — — 1,208 Inventories 5,816 2,411 — — 8,227 Other assets 12,483 7,331 — — 19,814 Total other assets 2,389,767 87,486 57,641 (2,194,848 ) 340,046 Total assets $ 5,718,963 $ 2,844,538 $ 57,641 $ (2,813,390 ) $ 5,807,752 Liabilities and Stockholders ’ Equity Current liabilities: Accounts payable and accrued liabilities $ 416,249 $ 137,361 $ — $ (1 ) $ 553,609 Accounts payable - intercompany 63,373 554,313 127 (617,813 ) — Asset retirement obligation - current 120 — — — 120 Short-term derivative instruments 32,534 — — — 32,534 Current maturities of long-term debt 622 — — — 622 Total current liabilities 512,898 691,674 127 (617,814 ) 586,885 Long-term derivative instruments 2,989 — — — 2,989 Asset retirement obligation - long-term 63,141 11,839 — — 74,980 Other non-current liabilities — 2,963 — — 2,963 Long-term debt, net of current maturities 2,038,321 — — — 2,038,321 Total liabilities 2,617,349 706,476 127 (617,814 ) 2,706,138 Stockholders’ equity: Common stock 1,831 — — — 1,831 Paid-in capital 4,416,250 1,915,598 259,307 (2,174,905 ) 4,416,250 Accumulated other comprehensive (loss) income (40,539 ) — (38,593 ) 38,593 (40,539 ) Retained (deficit) earnings (1,275,928 ) 222,464 (163,200 ) (59,264 ) (1,275,928 ) Total stockholders’ equity 3,101,614 2,138,062 57,514 (2,195,576 ) 3,101,614 Total liabilities and stockholders ’ equity $ 5,718,963 $ 2,844,538 $ 57,641 $ (2,813,390 ) $ 5,807,752 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Three months ended September 30, 2018 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 235,683 $ 125,279 $ — $ — $ 360,962 Costs and expenses: Lease operating expenses 16,502 5,823 — — 22,325 Production taxes 4,505 4,843 — — 9,348 Midstream gathering and processing 54,397 24,516 — — 78,913 Depreciation, depletion and amortization 119,914 1 — — 119,915 General and administrative 16,314 (467 ) 1 — 15,848 Accretion expense 812 225 — — 1,037 212,444 34,941 1 — 247,386 INCOME (LOSS) FROM OPERATIONS 23,239 90,338 (1 ) — 113,576 OTHER (INCOME) EXPENSE: Interest expense 34,254 (1,001 ) — — 33,253 Interest income (86 ) (6 ) — — (92 ) Litigation settlement 917 — — — 917 Gain on sale of equity method investments (2,733 ) — — — (2,733 ) (Income) loss from equity method investments and investments in subsidiaries (104,226 ) (1 ) 275 91,094 (12,858 ) Other income (37 ) (24 ) — — (61 ) (71,911 ) (1,032 ) 275 91,094 18,426 INCOME (LOSS) BEFORE INCOME TAXES 95,150 91,370 (276 ) (91,094 ) 95,150 INCOME TAX BENEFIT — — — — — NET INCOME (LOSS) $ 95,150 $ 91,370 $ (276 ) $ (91,094 ) $ 95,150 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Three months ended September 30, 2017 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 188,390 $ 77,108 $ — $ — $ 265,498 Costs and expenses: Lease operating expenses 16,019 4,001 — — 20,020 Production taxes 4,052 1,367 — — 5,419 Midstream gathering and processing 52,725 16,647 — — 69,372 Depreciation, depletion and amortization 106,649 1 — — 106,650 General and administrative 13,956 (892 ) 1 — 13,065 Accretion expense 335 121 — — 456 Acquisition expense (5 ) 38 — — 33 193,731 21,283 1 — 215,015 (LOSS) INCOME FROM OPERATIONS (5,341 ) 55,825 (1 ) — 50,483 OTHER (INCOME) EXPENSE: Interest expense 27,914 (784 ) — — 27,130 Interest income (29 ) (8 ) — — (37 ) (Income) loss from equity method investments and investments in subsidiaries (53,880 ) 128 296 56,193 2,737 Other income (344 ) (1 ) — — (345 ) (26,339 ) (665 ) 296 56,193 29,485 INCOME (LOSS) BEFORE INCOME TAXES 20,998 56,490 (297 ) (56,193 ) 20,998 INCOME TAX EXPENSE 2,763 — — — 2,763 NET INCOME (LOSS) $ 18,235 $ 56,490 $ (297 ) $ (56,193 ) $ 18,235 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Nine months ended September 30, 2018 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 596,018 $ 343,076 $ — $ — $ 939,094 Costs and expenses: Lease operating expenses 46,926 17,217 — — 64,143 Production taxes 13,309 10,552 — — 23,861 Midstream gathering and processing 152,605 61,941 — — 214,546 Depreciation, depletion, and amortization 352,846 2 — — 352,848 General and administrative 45,100 (2,148 ) 3 — 42,955 Accretion expense 2,397 659 — — 3,056 613,183 88,223 3 — 701,409 (LOSS) INCOME FROM OPERATIONS (17,165 ) 254,853 (3 ) — 237,685 OTHER (INCOME) EXPENSE: Interest expense 103,310 (2,388 ) — — 100,922 Interest income (144 ) (18 ) — — (162 ) Litigation settlement 917 — — — 917 Insurance proceeds (231 ) — — — (231 ) Gain on sale of equity method investments (28,349 ) (96,419 ) — — (124,768 ) (Income) loss from equity method investments and investments in subsidiaries (387,991 ) (694 ) 833 352,570 (35,282 ) Other (income) expense (1,167 ) (34 ) — 1,000 (201 ) (313,655 ) (99,553 ) 833 353,570 (58,805 ) INCOME (LOSS) BEFORE INCOME TAXES 296,490 354,406 (836 ) (353,570 ) 296,490 INCOME TAX BENEFIT (69 ) — — — (69 ) NET INCOME (LOSS) $ 296,559 $ 354,406 $ (836 ) $ (353,570 ) $ 296,559 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Nine months ended September 30, 2017 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 710,184 $ 212,271 $ — $ — $ 922,455 Costs and expenses: Lease operating expenses 49,891 10,153 — — 60,044 Production taxes 10,799 3,665 — — 14,464 Midstream gathering and processing 132,740 43,518 — — 176,258 Depreciation, depletion, and amortization 254,884 3 — — 254,887 General and administrative 39,882 (1,963 ) 3 — 37,922 Accretion expense 908 240 — — 1,148 Acquisition expense — 2,391 — — 2,391 489,104 58,007 3 — 547,114 INCOME (LOSS) FROM OPERATIONS 221,080 154,264 (3 ) — 375,341 OTHER (INCOME) EXPENSE: Interest expense 79,095 (4,298 ) — — 74,797 Interest income (913 ) (14 ) — — (927 ) Gain on sale of equity method investments (12,523 ) — — — (12,523 ) (Income) loss from equity method investments and investments in subsidiaries (124,446 ) 2,586 869 154,459 33,468 Other (income) expense (1,522 ) (241 ) — 900 (863 ) (60,309 ) (1,967 ) 869 155,359 93,952 INCOME (LOSS) BEFORE INCOME TAXES 281,389 156,231 (872 ) (155,359 ) 281,389 INCOME TAX EXPENSE 2,763 — — — 2,763 NET INCOME (LOSS) $ 278,626 $ 156,231 $ (872 ) $ (155,359 ) $ 278,626 CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Amounts in thousands) Three months ended September 30, 2018 Parent Guarantors Non-Guarantor Eliminations Consolidated Net income (loss) $ 95,150 $ 91,370 $ (276 ) $ (91,094 ) $ 95,150 Foreign currency translation adjustment 3,052 103 2,949 (3,052 ) 3,052 Other comprehensive income (loss) 3,052 103 2,949 (3,052 ) 3,052 Comprehensive income (loss) $ 98,202 $ 91,473 $ 2,673 $ (94,146 ) $ 98,202 Three months ended September 30, 2017 Parent Guarantors Non-Guarantor Eliminations Consolidated Net income (loss) $ 18,235 $ 56,490 $ (297 ) $ (56,193 ) $ 18,235 Foreign currency translation adjustment 6,832 158 6,674 (6,832 ) 6,832 Other comprehensive income (loss) 6,832 158 6,674 (6,832 ) 6,832 Comprehensive income (loss) $ 25,067 $ 56,648 $ 6,377 $ (63,025 ) $ 25,067 Nine months ended September 30, 2018 Parent Guarantors Non-Guarantor Eliminations Consolidated Net income (loss) $ 296,559 $ 354,406 $ (836 ) $ (353,570 ) $ 296,559 Foreign currency translation adjustment (5,815 ) (70 ) (5,745 ) 5,815 (5,815 ) Other comprehensive (loss) income (5,815 ) (70 ) (5,745 ) 5,815 (5,815 ) Comprehensive income (loss) $ 290,744 $ 354,336 $ (6,581 ) $ (347,755 ) $ 290,744 Nine months ended September 30, 2017 Parent Guarantors Non-Guarantor Eliminations Consolidated Net income (loss) $ 278,626 $ 156,231 $ (872 ) $ (155,359 ) $ 278,626 Foreign currency translation adjustment 12,719 232 12,487 (12,719 ) 12,719 Other comprehensive income (loss) 12,719 232 12,487 (12,719 ) 12,719 Comprehensive income (loss) $ 291,345 $ 156,463 $ 11,615 $ (168,078 ) $ 291,345 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Amounts in thousands) Nine months ended September 30, 2018 Parent Guarantors Non-Guarantor Eliminations Consolidated Net cash provided by (used in) operating activities $ 416,833 $ 192,123 $ (1 ) $ 1 $ 608,956 Net cash (used in) provided by investing activities (344,330 ) (188,415 ) (2,318 ) 2,318 (532,745 ) Net cash (used in) provided by financing activities (51,197 ) — 2,319 (2,319 ) (51,197 ) Net increase in cash, cash equivalents and restricted cash 21,306 3,708 — — 25,014 Cash, cash equivalents and restricted cash at beginning of period 67,908 31,649 — — 99,557 Cash, cash equivalents and restricted cash at end of period $ 89,214 $ 35,357 $ — $ — $ 124,571 Nine months ended September 30, 2017 Parent Guarantors Non-Guarantor Eliminations Consolidated Net cash provided by (used in) operating activities $ 310,624 $ 181,108 $ (1 ) $ 2 $ 491,733 Net cash (used in) provided by investing activities (2,034,554 ) (1,554,063 ) (1,843 ) 1,408,980 (2,181,480 ) Net cash provided by (used in) financing activities 354,143 1,407,137 1,845 (1,408,982 ) 354,143 Net (decrease) increase in cash, cash equivalents and restricted cash (1,369,787 ) 34,182 1 — (1,335,604 ) Cash, cash equivalents and restricted cash at beginning of period 1,458,882 1,993 — — 1,460,875 Cash, cash equivalents and restricted cash at end of period $ 89,095 $ 36,175 $ 1 $ — $ 125,271 |